Roche Deal With Tiny Sunnyvale Biotech Revives Old Family Ties

Xconomy San Francisco — 

The eight-employee Sunnyvale, CA, company Galaxy Biotech has just scored a licensing deal with Swiss drug giant Roche, which will pay $8 million upfront for exclusive rights to a drug candidate that could complement Roche’s formidable lineup of antibody drugs against cancer.

Galaxy’s five PhDs and their research assistants develop antibodies against molecules in the body that help tumors grow. Roche has acquired worldwide rights to a Galaxy antibody that blocks FGF2, a growth factor implicated in a range of tumor types. In addition to receiving an upfront payment, Galaxy may also reap milestone payments and royalties from Roche under the agreement announced yesterday by the two companies.

For Cary Queen, president and co-founder of Galaxy, the Roche deal has a pleasing symmetry. Roche was an early backer of Genentech, which in 1989 became the first partner of another company Queen co-founded, Protein Design Labs. Genentech used Protein Design Labs’ technology in the development of the cancer treatment trastuzumab (Herceptin) and other antibody drugs. Genentech, based in South San Francisco, is now owned by Roche.

“They’ve come through for me twice,” Queen says. “We couldn’t have hoped for a better partner.”

The family ties go even deeper. Galaxy’s chief scientific officer, K. Jin Kim, is a former Genentech researcher who played a key role in the development of another Genentech cancer-fighting antibody drug, bevacizumab (Avastin).

At Galaxy, Kim leads a program that builds on the kind of work Queen did at Protein Design Labs, where he discovered ways to “humanize” antibodies originally developed in mice so that they would not trigger immune responses in human patients. Galaxy was founded to create humanized antibodies against tumor growth agents that had so far been overlooked by drug developers.

FGF2, or Fibroblast Growth Factor 2, was one of the targets Galaxy tackled. Queen says FGF2 has been known as a tumor agent since the late 1970s, but more evidence accumulated over the 1980s and 1990s. Studies indicate that FGF2 directly promotes the growth of tumors, and also helps them develop a blood supply in a process known as angiogenesis.

Galaxy created an antibody that sticks to FGF2, blocks its action, and prevents it from attaching to receptors on cells. In animal tests, a form of the antibody augmented the anti-tumor effects of bevacizumab, the company says. Galaxy found that the additive effect also appeared in combination with sorafenib (Nexavar), a kidney cancer drug sold by Onyx Pharmaceuticals.

Roche’s acting head of pharma research, Mike Burgess, says in a press release. that the humanized antibody that Galaxy developed against FGF2 has demonstrated considerable promise in preclinical studies. “We look forward to developing this and possibly other derivative compounds to complement Roche’s already strong portfolio of antibody products in the oncology field,” he adds.

Queen says Galaxy is sticking with its original plan to remain a small discovery company that licenses out its antibody products, and does not try to build its own drug development capacity. Its research began in 2002. Takeda Pharmaceutical Company licensed Galaxy’s first product, an antibody to hepatocyte growth factor. Takeda returned rights to that product in July, and Galaxy is seeking a new partner or licensee for it. But the milestone payments from Takeda have helped make tiny Galaxy profitable for the past five or six years, Queen said.

“It’s a distinction we’re pretty proud of,” he says.

The closely held company has never sought venture capital financing, Queen says.

Roche’s $8 million upfront payment will go a good way toward supporting Galaxy’s operations, Queen says. He wouldn’t disclose the company’s annual costs. But he says that rough estimates in the biotechnology industry peg the expense of a single PhD at about $200,000, and that’s not a bad benchmark for estimating the expenses of Galaxy’s small research operation.

In addition to the Roche deal for the antibody to the growth factor FGF2, Queen says Galaxy has lined up another deal for its third antibody product, which blocks the receptor where FGF2 latches on to cells. Queen said he could not yet release details about that agreement.